HARWICH — Town Administrator Christopher Clark has proposed a balanced omnibus budget of $65.4 million for fiscal 2019, which has some modest service increases but otherwise holds the line on spending. The lean budget is one part of a larger plan to help the town boost its bond rating, which could save taxpayers millions when it comes to building a sewer system.
Clark’s plan includes a $23.8 million operating budget, which is up about 3.3 percent over the current year’s spending plan, but will not require a general Proposition 2½ override. The plan includes two new firefighter positions, one new police officer and a new information technology position. The public safety hires were a priority of the board of selectmen. But more than a million dollars in other wish-list items were omitted, like a full-time DPW position, a part-time pet crematory operator, a part-time receptionist for the council on aging, and funds to operate the community center and recreation programs on Sundays. The plan includes additional staff hours for the cultural center and a part-time videographer for Channel 18, but those positions are not funded from tax revenues.
Though the proposed operating budget only shows a modest increase from the FY18 spending plan, the omnibus budget is up 7.2 percent, largely driven by the high cost of borrowing for capital projects. Debt service jumped more than 80 percent in the FY19 plan, accounting for the first payments on the Saquatucket Harbor projects, the wastewater treatment deal with Chatham, and the design of the sewer system in East Harwich.
By far the biggest capital project ahead for Harwich is the implementation of Phase 2 of the wastewater plan, estimated at $22 million. Borrowing for that project will be costly, but the town could be eligible for better rates if it improves its credit score. Harwich has an AA plus bond rating from Standard and Poor’s, though all of the towns that surround it – including Chatham and Orleans – have AAA ratings. In a recent rating for short-term borrowing, Standard and Poor’s acknowledged a number of improvements in town finances, with greater consistency in free cash and more robust reserves. The town has also worked to consistently build its trust fund for other post-employment benefits, known as OPEB. The ratings agency acknowledged this, but urged the town to increase OPEB funding and to accelerate plans to fully fund pension obligations.
Clark said he is optimistic that Harwich can earn an AAA rating in the next few years.
“This will be of tremendous significance as the town continues its entrance into a new phase of significant capital infrastructure improvements for addressing the wastewater issue,” Clark wrote in his budget presentation. Together with the improvements implemented so far, “the town already possesses a strong housing market and low unemployment and is very high in some area property values,” he wrote.
The town has increased the number of full-time equivalent employees by almost 10 in the last five years, Clark noted.
“These positions are needed, but the trend of cost of living plus expansion of staff has added fiscal pressure,” he wrote. “I would recommend holding at the FY19 levels, for fiscal reasons, for a year or two.” The wages paid by the town to its employees have increased modestly in recent years, but they have not kept pace with surrounding towns, he noted.
“We have lost at least two employees in the last six months to neighboring towns with greater compensation,” Clark wrote.
The town’s Monomoy Regional School District assessment will be $25.6 million, representing a large part of the town budget. The assessment is up about 4 percent, similar to the increase in the current year’s budget, and an amount Clark said is generally sustainable. But it is critically important that the district retain existing students and recruit new ones through School Choice, the town administrator said.
“It would be my strong recommendation to try and reach budget agreement on the assessment as quickly in the process as possible,” he warned selectmen. “The education landscape on Cape Cod offers significant opportunities for families to have their children select other public schools or charter schools. These actions can be brought about simply by a crisis [of] confidence in our system,” Clark wrote. Each student leaving for another district through School Choice costs the district about $5,000, and each one who leaves for a charter school could take up to $15,000 with them, he said.
Selectman Donald Howell said the school assessment remains too high, and annual growth above around 3 percent will not be sustainable over time.
“They’ve got to find a way of stabilizing the ship and getting closer to 3 percent,” he said.
The Cape Tech school assessment is up by just 1.4 percent, since the town’s enrollment number is expected to remain steady from the current year. The increase is related to a general loss of 33 students from the district, which requires member towns to pay a greater per-pupil assessment.
Clark acknowledged that there is a pent-up demand to increase service levels from the town, despite fiscal realities.
“This concept emerged from the expectation that the merging of the Chatham and Harwich school systems in to Monomoy would realize significant dollar savings and therefore those dollars could be applied to the Harwich town-side organization,” he wrote. While Chatham did see those savings, Harwich’s benefits were in avoiding the cost of replacing its aging high school building. “Therefore a demand was created where precious dollars were not available,” Clark wrote. But given prudent cost control and growth in local receipts, the he said he believes the town will be able to add one or two staff positions per year.
Selectmen Chairman Michael MacAskill said the omnibus increase of over 7 percent “is a huge number.” He warned that the 2.5 percent tax growth allowed under Proposition 2½ should be treated as an upper limit, not an automatic increase. It is difficult to ask taxpayers to fund a spending plan with an increase over 7 percent “and ask them for $30 million on top of that,” he said, referring to capital projects.
Clark said the goal of budgeting is to provide a stable level of service using available funds. Selectmen have asked for certain priority items to be included in the spending plan, but also want a lower budget number, he said. “If you want to have the budget go down, then there’s an inconsistency in the message,” Clark said. Adding positions and decreasing costs is “not a calculus that works,” he said. Actually reducing the budget would require layoffs and downsizing, he added.
Selectmen will receive the full budget shortly and will revisit it in greater detail.